The story referred here is the short story "The Medicine Bag" by Virginia Driving Hawk Sneve.
Explanation:
1. I wanted to sink right through the pavement.
2. I didn't want them laughing at Grandpa.
3. I stood up to take the bag, somehow knowing I should.
4. Put the sacred sage in my medicine bag.
Martin's feelings in "The Medicine Bag" changes over the course of the story from first being embarrassed by his Grandpa to accepting the responsibility of taking the medicine bag which is the cultural heritage of the Sioux.
The tone of a passage comes from the setting of the story and the details and words used inside the story. Mood is the atmosphere of the passage by the words the author uses.